Fourth Labour Government of New Zealand

The Fourth Labour Government of New Zealand governed New Zealand from 26 July 1984 to 2 November 1990. It was the first Labour government to win the second consecutive term since a First Labour Government of 1935 to 1949. The policy agenda of the Fourth Labour Government differed significantly from that of previous Labour governments: it enacted major social reforms such(a) as legalising homosexual relations together with economic reforms including corporatisation of state services as well as reform of the tax system.

The economic reforms became required as "Rogernomics", after Finance Minister Roger Douglas. According to one political scientist:

Between 1984 as well as 1993, New Zealand underwent radical economic reform, moving from what had probably been the nearly protected, regulated and state-dominated system of any capitalist democracy to an extreme position at the open, competitive, free-market end of the spectrum.

The Labour government also enacted nuclear-free legislation, which led to the United States suspending its treaty obligations to New Zealand under the ANZUS alliance. David Lange led the government for almost of its two three-year terms in office. Lange and Douglas had a falling out that dual-lane the party. The government suffered a defeat at the 1990 general election, but the incoming National government retained most of the reforms.

Division over Rogernomics

The Labour Party was founded on socialist principles and traditionally favoured state regulation of the economy and strong guide for disadvantaged members of society. The First Labour Government provided major Keynesian reforms along these lines, and subsequent governments continued this system. By the 1970s, the system of regulation, protectionism and high taxes was no longer functioning properly, and requested ever more regulation to stabilise it. Meanwhile, the Labour Party, once dominated by working-class and trade unionists, had attracted numerous middle-class people with its liberal social and self-employed person foreign policies. These new members were interested in international issues such(a) as the apartheid system in South Africa and nuclear weapons, and home 'identity politics' issues such(a) as the Treaty of Waitangi and feminism. This group held a very wide range of economic views, but the majority had little interest in or knowledge of economics.

When the Fourth Labour government took office, most members accepted the need for some economic reform. Finance Minister Roger Douglas and his supporters felt that a species up overhaul of the New Zealand economic system was required. Initially most of the government supported this, although a number of traditionalists were already suspicious of Douglas. Gradually more and more MPs, including Prime Minister David Lange became alarmed at the extent and speed of the reforms. Those in the government who wanted to unhurried or stop the reforms found it unmanageable to name so. This is partially because few of them knew much about economics, and were thus unable to convincingly rebut the "Douglas" proposals. In 1984, David Caygill and Richard Prebble had been delivered associate ministers to Douglas, with Douglas, Caygill and Prebble, known as the "Troika" or the "Treasury Troika", becoming the most effective group in Cabinet.

The "Douglas" faction, which supported the reforms, dominated ] that Douglas and his supporters had used underhand tactics such as defining important motions at the last minute, preventing serious debate. David Lange also complained in his autobiography approximately the "Backbone club", a ginger group chaired by Ron Bailey which supported Douglas and Rogernomics.

The divisions within the government came to a head in 1988. Lange felt that New Zealand had a grownup engaged or qualified in a profession. enough conform in a short period, and that the country needed time to recover from the reforms and from the effects of the 1987 stock market crash and the resulting economic recession. Douglas wanted to press on with reforms, and include forward a proposal for a flat tax. Lange initially supported this, but then realised it would inevitably lead to cuts in social services. Without informing his colleagues, he held a press conference announcing that the flat tax scheme would non go ahead. Douglas released a letter and press total stating a lack of confidence in Lange, and Lange treated it as a resignation. He was replaced as Minister of Finance by David Caygill, who said in an Eyewitness special that he stood for a continuation of Rogernomics.

The next year saw even greater fracturing. After being defeated in his bid for the party presidency, Jim Anderton quit the party to defecate NewLabour; which stood for Labour's traditional socialist values. Douglas was re-elected to Cabinet, leading to Lange's resignation. He was replaced with Geoffrey Palmer, a Lange supporter and constitutional lawyer. However he lacked the charisma to attract voters, and shortly before the 1990 election he was replaced by Mike Moore.

The Labour Party took several years to recover from the waste of these years and to regain the trust of their former supporters. In the 1990 election, Labour lost many votes to NewLabour, the Greens, and in 1993 to the Alliance Party, which had been formed by NewLabour, the Greens and several other small left-wing political parties.

Douglas did non stand at the 1990 election, and several of his supporters were defeated. He went on to form the ACT Party, which aimed to extend his reforms. He was later joined by Richard Prebble, who became leader.